@SlugRacingAgree and disagree. A good example of a company making real money out of China and is still opening more shops there is IKEA. I am sure the concept is not too difficult to copy, but IKEA must be doing something right and remaining relevant. An interesting fact here, there was a copycat product of IKEA in the late 1970s early 1980s from of all places, Australia. Actus, if I remember correctly. Tried penetrating the SE Asian market then, but due to poor quality finishing, didn't do too well.
Here is a list of larger foreign companies that are still going strong in China.
https://hurun.com.au/hurun-largest-foreign-companies-in-china-2021I do agree that doing business in China is tough, full of pitfalls. Personally, I have lost big time on some direct investments there in the mid 2000s. Through naïve expectations and not understanding local culture sufficiently, having a "wrong" local partner etc, we learn. But that also applies to investments in India and South American countries and even Australia from experience of some of my friends.
What my observation of what FLC is doing in China, is threading carefully using the 3 conditions and 5 managerial factors described in this article from Wharton School of the University of Pennsylvania.
https://knowledge.wharton.upenn.edu/article/which-companies-are-winning-in-china/"We then established three necessary conditions, and that is you have to have access to the market; there has to be demand for your product or service; and you have to come to the competition — to the arena — with some significant advantages relative to local competition. And then we considered five managerial factors. These are actual decisions that managers make in entering China, and they are commitment, government structure, leadership, strategy, and the product that you bring. And then, finally, we wanted to recognize that there was a really key role of luck or what the economists call “the exogenous factors” — things that are outside your control that can dictate your success or failure."In my view, China is still a market too big to ignore. There will be competitions, there will be copycats, but what I am quite sure of, is that our product is dealing with bacteria, biological treatment process that requires different
tuning for a different range of wastewater quality. Different locations, temperature range, altitude, diet types combinations of the populations etc. The hardware can be copied easily, but the jewel is in the software, and more importantly, the more installations will produces more data for the fine tuning of the plants to work efficiently.
Whole heartedly agree that diversification is key. We can't depend on China alone, and I couldn't be happier when the business in USA starts shaping up.
Where is the riskiest part of our company business currently? I would say USA. We are only starting out there after so many years of small operations. Having an existing huge factory office in Minnesota for quite a few years mainly making just the aeration equipment, had an office in New York which I am glad we have closed that, employing a whole team from COO to Treasurer to Legal Officer and a sales team in US and the Caribbean, yet revenue was dismal. We are now hoping to have the 3 Amigos riding to town to help us to mitigate that risk.
On timeline, we are fortunate to have the China side as an early adopter of our technology. Without that, we would not have the data to make the plants work well in other parts of the world. Trump administration had held back the spending on environment, and now when the needs for products like ours are no longer
economically driven, but is now
crisis driven, we have a good chance to make it successfully in USA.
So Tom, give us some results.
